Research Reports On HSIL By IndiaNivesh & On CCL Products & NRB Bearings By Nirmal Bang

HSIL Ltd is the leading player in sanitaryware sector with market share of more than 40%. It is the second largest player of faucets. In our opinion, the company would be the beneficiary of demand revival. The long term outlook of building products sector remains robust due to favourable demographic factors and government focus on improving the standard of living of people. Packaging products segment performance is improving due to reducing fuel costs. One of the key triggers for the stock would be the separation of building products and packaging products business which would reduce the volatility in segmental performance. Recent correction in stock price provides an opportunity to accumulate the stock.

We had a meeting with the management of NRB Bearings (NRB) recently to understand its views on the latest financial performance of the company, strategies to overcome near-term headwinds and business outlook for the next couple of years. The management was candid enough in recognising near-term headwinds and is actively working on a roadmap to come back on the growth path.

Our interaction with the management of CCL Products (India) or CCL at the road-show held recently reinforced our long-term positive view on the stock. While the news of likely freeze dried coffee capacity expansion in India led to a reduction in our FY18E EPS, the capacity expansion is because of strong demand for its instant coffee variety and is only a small blip in healthy medium-term top-line and bottom-line growth prospects. The expansion, costing Rs2.5bn, will be financed through internal accruals and debt and does not require any equity dilution. Earnings growth will pick up steam once the utilisation of expanded capacity rises. Changes to our model resulted in a 17% decrease in FY18E EPS, but EPS CAGR is likely to be strong at 21% over FY16E-FY20E with pre-tax RoCE expected to regain its 27% level after a small blip in FY18. CCL stock trades at 14.9xFY18E EPS. Targeting 19xFY18E EPS is not aggressive for a fast-growing company with a healthy RoCE and we have arrived at a target price of Rs219 (Rs250 earlier), up 27% from the CMP of Rs172. We have retained Buy rating on the stock

IndiaNivesh-HSIL-March-16

CCL Products (India)- Road-show Update- Long-term Growth Prospects Intact

NRB Bearings- Management meet Update- Near-term Headwinds Likely to Wane Soon- 3 March 2016